Increase the Odds of Digital Transformation Success: Put People First

August 31, 2021
4 Minute Read

It’s not even a coin toss. Only 20-30% of digital transformations succeed as planned. Robert Olszak, RGP’s VP for Procurement & Supply Chain Management, details how businesses can increase the odds of success by focusing on those most impacted by change: your employees.

With the digital and technology race in full swing, companies are striving to create mature digital ecosystems. CXOs are leading the charge and the question over whether they’re just reactively driving digital advancements in response to COVID-19’s digital disruption or proactively pioneering innovations for strategic advantage remains unclear. What is clear is that many C-suite executives remain frustrated by the increasing failure rate associated with enterprise-wide Digital Transformation Strategies (DTS).

And they’re more common than most people think. Depending on the latest research, DTS success rates hover in the 20-30% range. Not even close to a sure thing. In fact, if you were a betting person, it would actually pay to bet against a digital transformation succeeding.

Worse, those failures have consequences for businesses with significant time, money and resources being squandered.

To successfully lead a full digital transformation project, stakeholders must recognize this exercise is a marathon, not a sprint.

So, why the poor results? Three reasons. There can be many small reasons, but there’s definitely one big one: Not putting people at the center and cultural cohesiveness across your organization to support the overarching strategy.

Second, communication gaps can leave employees either unaware of pending changes or they’re not fully bought-in to the digital change. Especially perilous: Never fully answering employees’ most important question: “What’s in it for them?”

Third, companies source emerging technologies without fully understanding the full operational requirements needed to stand up a new technology implementation in the first place. Then there’s the lack of data to make informed decisions on digital transformation projects.

Not seeing fruitful progress is another source of frustration. To successfully lead a full digital transformation project, stakeholders must recognize this exercise is a marathon, not a sprint. It’s a long-term strategy implementation that requires a comprehensive plan supported by a detailed transformation roadmap.

Many investments in new technologies never achieve their ROI simply because the people who use the technology aren’t invested enough to change their ways of working. ‘Change’ is then tagged onto the end when it really needs to lead the way.

Dr. John P. Kotter, Change Management Expert & NY Times Bestselling Author

Developing a Human-First Mindset

YaYa co-founder & CEO Phill Bolland recently told CEO Magazine: “Whether your target audience is internal or external, no business will survive by alienating one of its most important assets: Its users.”

I’ve seen this up close. Having been intimately involved with major global enterprise-wide digital transformation change initiatives, too often people are considered an afterthought. This critical misstep practically guarantees failure.

Companies that have successfully implemented digital transformations have done so by reprioritizing core strategic elements so that people aren’t an afterthought but instead front-and-center before the project even begins.

Start by asking questions around how this will impact our workforce. Who needs to be included to drive end-to-end change adoption? Why change now?

People and culture should be non-negotiable when it comes to developing a digital strategy.

Here’s a simple analogy: Imagine that the technology or digital solution is the engine in the car. Having the most powerful state-of-the-art engine on the market is pointless if you do not have the right person behind the wheel to drive the car. Even investing a ton of capital on purchasing the best engine on the market and putting it into a dilapidated old vehicle won’t guarantee an increase in the car’s value. Your organizational structure and culture need to be well-suited to handle the advancements to your digital ecosystem.

People and culture should be non-negotiable when it comes to developing a digital strategy. To truly transform, when sourcing the right technology and developing your digital transformation initiative, leaders need to design their strategy and solution with their employees in mind—first.

A Crisis of Perfectionism

Another barrier to success is that many transformational leaders often cling to perfectionism at all costs. Fair enough, but here’s the truth: No digital evolution will ever be perfect. Technology moves too rapidly to ever allow a truly optimal state. Accept this ahead of time and you’ll make significant progress.

The old adage “perfection is the enemy of done” holds true especially when it comes to digital transformation projects. According to Rajan Sethuraman, CEO of LatentView Analytics, “Enterprises are better served by focusing on individual deployments and considering how new tools will play together within the company’s long-term plans.”

Shifting to this mindset enables leaders at all levels of your organization to embrace digital transformation as a process, not an end-state. Business requirements will inevitably change. It’s why the term “pivot” became so ubiquitous during the global pandemic and why agile is a must these days.

At best, leaders should strive to find near-term wins within each functional phase of a digital transformation. Embed a framework into your strategy for managing long-term business objectives in relation to multi-phase implementations.

Chasing Shiny Objects

Company “identity crises” are another potential source of failure. This is a common result of leadership’s misalignment with primary business goals and digital strategy. While technologies can greatly improve company performance and create new revenue sources, not every technology on the market is the right fit for your company.

The demands of today’s hybrid workforce and workplace make it a necessary requirement for every organization to adopt digital enablement tools. Rather than chasing the latest “shiny object,” the primary objective should be determining what technology enabling tools will yield the greatest benefits to the people who will be using them. Creating a healthy marriage between all aspects of your operation and a digital solution requires more than just a fleeting fad.

The next best thing is not always the best thing.

Your technology or digital tools should also align with the organizational culture. They must be able to solve a pressing problem with sustainable results, not just satisfy an immediate need for short-term gain. This is why it’s absolutely critical that companies looking to leverage emerging technologies must be clear on their “Why?” before their “How?”

Communicating your reasons for the change for internal stakeholders is critical. Quantify and qualify your company’s appetite for technology adoption. Throughout the process be realistic about what you’ll achieve by evolving your digital ecosystem.

Little Return for Huge Investments

According to MIT Sloan Management Review, CEOs and CIOs will invest an estimated $6.8 trillion in digital transformation projects over the next three years. They too affirmed the grim statistic that 70% of these projects will likely fail.

Finally, as mentioned earlier, if you were a betting person, you’d likely lose placing stakes on a digital transformation succeeding. But it doesn’t always have to be that way. Put people first—throughout a transition—and you’ll greatly improve those odds. Do it well and those odds can be far safer than even a mere coin toss.

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Robert Olszak

VP, Supply Chain Optimization
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RGP offers a variety of services to assist with all aspects of digital transformation for business.

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